Minute by the Lord Mayor
To Council:
This Minute requests that Council join with
other NSW Councils in requesting the NSW Government to address the unrelenting
growth of cost shifting to Local Government.
Cost shifting occurs when one level of
government transfers a function to another level of government. This includes
provision of services, programs or capital works and regulatory compliance.
Legislation passed by the NSW Parliament may also impose additional costs on
Local Government. Such cost shifting, coupled with rate pegging, is
increasingly eroding any possibility of financially sustainable local
government. Many Councils risk losing the capacity to deliver tailored,
grassroots services to their communities and properly deliver and maintain
vital local infrastructure.
Local Government NSW (LGNSW) has been
conducting periodic surveys of the extent of cost shifting by the Federal and
State Governments on to NSW local government for several years. In the
2006/2007 financial year, $380 million in costs were shifted onto local
government. The most recent report, produced for Local Government NSW by
independent consultants Morrison Low, found that $1.36 billion had been passed
onto NSW Councils in the 2021/2022 financial year. This is an increase of $540
million since the last report from the 2017/2018 financial year. On average,
this represents an additional cost of $460.67 for every NSW ratepayer across
the state, effectively a hidden tax to other levels of government.
The Morrison Low Report, “How State Costs Eat
Council Rates”, is shown at Attachment A to the subject Minute.
Impact
on the City of Sydney
Other levels of government shift costs onto
City of Sydney ratepayers in various ways, including through the imposition of
waste and emergency services levies; reducing or ceasing funding for vital
services and programs, such as Meals on Wheels; and compliance with regulations
such as those related to companion animals and noxious weeds.
The City bears other costs by filling service
gaps such as contributing to crime prevention through our CCTV network,
providing homelessness services and providing a community sharps bins service.
We are denied the opportunity to raise additional revenue due to rate
exemptions for government owned properties, certain non-government properties
and community housing.
The total costs that were shifted onto the
City of Sydney in the 2021/2022 financial year is estimated to exceed $48
million.
There are other areas where the actual costs
being shifted are unknown, such as the costs associated with Crown Land being
transferred to the City, undergrounding electricity cables and aerial bundling
of wires.
Meeting these myriad costs impacts on our
capacity to provide the services, programs and infrastructure to our
communities and fulfill our responsibilities in meeting the needs of
Australia’s leading international city.
A copy of cost shifting examples onto the
City of Sydney for the financial year 2021/2022 that was provided to Local
Government NSW is shown at Attachment B to the subject Minute.
Prior to the 2023 NSW state election, the
then Minns Labor Opposition wrote to Local Government NSW acknowledging that
cost shifting had undermined the financial sustainability of the local
government sector. It is now time for the Minns Labor Government to move beyond
mere acknowledgement and urgently address cost shifting through a combination
of regulatory reform, budgetary provision and appropriate funding.
Addressing cost shifting must be part of the
wider issue of Local Government funding. The United Services Union has advised
that it has secured an agreement with the NSW and Commonwealth Government for
Parliamentary Inquiries into this issue. The Union seeks the support of all
councils for both Inquiries.
I propose that the City of Sydney participate
in both Inquiries when they are announced with the aim of ensuring that an
appropriate modern and sustainable financial funding model for all councils is
achieved.
COUNCILLOR
CLOVER MOORE AO
Lord Mayor
Attachments
Attachment A.
How
State Costs Eat Council Rates
Attachment B.
Cost
Shifting Examples onto the City of Sydney for the Financial Year 2021/2022
Attachment C.
United
Services Union Letter Relating to Proposed Parliamentary Inquiries into Local
Government Funding
Moved by
the Chair (the Lord Mayor), seconded by Councillor Chan –
It is resolved that:
(A)
Council
receive and note the findings of the Local Government NSW Cost Shifting Report
- How State Costs eat Council Rates, for the 2021/2022 financial year as shown
at Attachment A to the subject Minute;
(B)
a copy
of the cost shifting report be placed on the City of Sydney website so that our
communities can access it;
(C)
the
Lord Mayor be requested to write to the NSW Premier, the NSW Treasurer and the
NSW Minister for Local Government requesting them to urgently address these
costs through a combination of regulatory reform, budgetary provision and
appropriate funding;
(D)
Council
welcome the agreement achieved with the Commonwealth and NSW Governments to
hold Parliamentary Inquiries into Local Government funding; and
(E)
the
Chief Executive Officer be requested to prepare submissions to both Inquiries
when their Terms of Reference are announced.
Carried
unanimously.
S051491